Lefty2021

Ive tried searching for the answer but can’t find what I need to know.
I have a friend who lives in Benidorm, has TIE, visits UK quite regularly where she owns an house and while here works shifts in a caring environment.
Should she declare that income in Spain for tax purposes, she is led to believe that she doesn’t need to declare it.

agree_to_disagree

She should be doing a 720 declaration in Spain every year, if the house is worth more than 50k euros...

it is mandatory if she is resident in Spain.

Fred James

She must also declare her UK income in Spain and pay Spanish income tax on it. Any UK tax paid on that income can be offset against the Spanish tax. As a Spanish tax resident she must declare all world wide assets on Form 720. Failure to do so can result in very large fines.

Chipmonk

Why does everyone asks questions on behalf of friends? Cant the friends do it themselves???

Lefty2021

🤔 my friend isn’t on this forum and doesn’t know I’m asking on her behalf, I am quite concerned for her as there are other concerns and I can see her getting in serious trouble, some people bury there head in the sand, don’t realise there are consequences, listen to people who only know on “hear say” and don’t actually know the facts, I thought the purpose of this forum was to share accurate information 🤔

Notdunroamin

720 every year, really?

That will come as news to many!

agree_to_disagree

Yup mate!

Take it VERY SEROUSLY, if you are required to do a 720!!!

Accountants here is Spain will do it for you but I check it myself in huge detail, before it is submitted.

Any mistakes and you personally are in for exorbitant fines and not the accountancy firm. To cover themselves they send it to you to check, before it is submitted.

However, the matter of the fines associated with the 720 is now up in the air as the european union have taken the Spanish government to court over, as the fines are excessively punitive.

Anyone with overseas investments over 50k euros must do it ever year. There is one caveat that if you value does not change by within certain limits it is not necessary to resubmit it.

In addition to the above relevant legal documents need to be translated to Spanish!

bolton wanderer

Not necessarily, If she only became resident in the later part of last year, ie from July 2020 then she wouldn't become tax resident for that year (2020) and would continue to pay UK taxes & non resident tax in Spain. (Her declaration completed in 2020 would be for 2019). This year, 2021, she would declare her taxes for 2020 but because she still didn't become tax resident in 2020 she would pay her taxes to UK and continue to pay non resident tax. However, next year, 2022, she would have to declare her taxes to Spain and complete her 720 form.

As a friend, she may have told you that she's not paying tax this year and you've jumped to the wrong conclusions. Sometimes, friendly advice may not be welcome.

agree_to_disagree

Once you become resident in Spain and take up employment, thereafter you are liable for taxes in Spain.

So taking the example of first half of the year 2020 in the UK and second half in Spain, then one return required for the empoyment in the UK (Jan to June) and one in the Spain (June to December).

Two tax returns required.

bobd22

You don't have to submit a 720 every year. You submit it once and only re submit if values declared increase by specified amount, or you close a declared account. As for property you declare the purchase price not current value.

bolton wanderer

OK, that's new to me, thanks. So a non tax resident in Spain is still liable for tax on UK earnings? It could be a nightmare claiming that back from the UK HMRC, especially with the differing tax periods (April-March & Jan-Dec).

agree_to_disagree

Just checked bob and yes is based on the purchase price, not the market value.

An initial 720 will be required in the case of a property based on the purchase price of the property and thereafter no more.

However, for other investments

- If the value has not changed by more then 20,000euros, no 720 required.
- If you have something like shares or other investment vehicles and you buy or sell any of these then 720 is required.

bobd22

Yes that's my understanding of it.
Also if ones situation is straightforward or only requiring to declare property etc then with a digital certificate you can submit it online easily. Obviously if situation is more complex as you said earlier take advice to ensure no errors are made.

agree_to_disagree

• Form 720 Spain comes with a series of very serious tax offences for late-submission or for doing so with incomplete, inaccurate or false data. Similarly, taxpayers are exposed to a very serious tax offence penalties for submissions using means other than the standard electronic media accepted.
• If you are found to be in breach of the obligation to report on accounts held in foreign credit institutions, you are exposing yourself to a fixed pecuniary penalty of 5,000 euros for each data or series of data, with a minimum amount of 10,000 euros.
• If you submit Form 720 Spain after the deadline, the penalty will be 100 euros for each data or series of data, with a minimum amount of 1,500 euros.
• If you are found to be in breach of the obligation to report on stocks, assets, securities, rights, insurances and income deposited, managed or earned abroad, you may find you have to pay a 5,000 euro fine for each data or series of data referred to each element, with a minimum amount of 10,000 euros.
• When you have not been required by the Tax Agency, but are found to submit this form after the deadline, your fine will be of 100 euros per data with a minimum amount of 1,500 euros.
• It is also worth noting that if you are in breach of the obligation to report on real estate owned abroad, in this case the fine will also be 5,000 euros per data, with a minimum amount of 10,000 euros.
• Another fine comes in the case of late-submission without being notified to do so by Tax Agency, which will entail 100 euros per data with a minimum of 1,500 euros.

https://iliaconsulting.com/en/form-720-spain/penalties/